The Great Depression
The Great Crash
■Prelude to the stock market crash
–In 1927, the economy had a
recession but gov’t & business
leaders ignored warning signs
–The Federal Reserve lowered
interest rates for loans to
stimulate the economy, but this
easy credit led speculators to
buy stock “on-the-margin”
The Great Crash
■An initial stock market crash on
Oct 24, 1929 (Black Thursday)
led to a catastrophic drop in
stocks on Oct 29 (Black Tuesday)
–Panicked investors sold stocks,
causing stock prices to plummet
–Banks lent less money, factories
produced less, workers were
fired or paid less → consumers
had less money to spend →
factories & businesses closed
The Great Crash
■Reasons for the depression:
–Overproduction of consumer
durable goods & agriculture
–The post-war conditions in
Europe
decreased
foreign
trade
Consumers
already owned
durable
goods & distribution
were not buying
–Unequal
of more
wealth,
high consumer debt, stock
market over speculation led to
an overall decrease in
consumer purchase power
Effects of the Great Depression
■The Depression hit all classes:
–Many families lost their homes
or farms & were forced to live
in “Hoovervilles”
–The U.S. saw unprecedented
poverty & suicide rates; fathers
abandoned their families;
lawlessness ensued
–The U.S. gov’t offered relief
checks to the unemployed
Effects of the Great Depression
■African-Americans who had
migrated to North were laid off
■Mexican immigrants faced
competition & deportation from
angry Americans
■The middle class was hit hard:
–Refused relief checks & charity
–Many lost their homes
–Health care declined; doctor &
dentist visits were “luxuries”
Employment Agencies &
Relief-Check Lines
Soup Kitchens & Breadlines
Mortgage Foreclosures
“Hoovervilles” & “Hoover Flags”
Hoover and Voluntarism
■President Hoover’s initial response
individualism”
was to “Rugged
reassure
Americans that
prosperity would return
■Hoover rejected bold gov’t action
& called for volunteerism among
charities, local gov’t, & business
■As the depression worsened,
Hoover called for gov’t projects
like the Reconstruction Finance
Corps (RFC) which loaned money
to failing businesses
The Hoover administration initiated job-creation
programs, like building the Hoover Dam
Hoover and Voluntarism
■In 1932, Hoover’s presidency
suffered two final blows:
–When 22,000 war veterans
marched to the capital to demand
their WW1 bonus checks early,
Hoover ordered this Bonus Army
to be forcibly removed
–The steady rise of bank failures
led to a complete collapse of the
U.S. banking system
Bonus Army
Douglas
MacArthur
Dwight
Eisenhower
Bank Failures, 1929-1933
The Dust Bowl (1931-1939) worsened the
Areas Affected
by
the
Dust
Bowl
drought
effects of the Depression
Fighting the Depression
■The inability of Republicans to
resolve the economic depression
opened the door for a Democratic
takeover in politics
■Once in power, Democrats
succeeded in relieving some
suffering, restored hope, &
created an unprecedented level
of gov’t intervention in the process
The Election of 1932
■The depression made Hoover the
“victim” while Franklin Roosevelt
emerged as the “savior”:
–In the 1932 election, FDR was
able to unite the rural & urban
factions of the Democratic party
& won a landslide victory
–FDR appealed to Protestants &
Catholics, farmers & workers,
native-born & immigrants
“I pledge you—I pledge myself to a
new deal for the American people.”
Conclusions
■The Depression of the 1930s
came as a shock to Americans:
–The consumer revolution led to
confidence that 1920s economic
prosperity would continue
–When the stock market crashed
in 1929, businesses closed &
millions were unemployed
–Americans began to look to the
gov’t for unprecedented support